To say the least, the Fed’s own projections of GDP growth
continue anemic at best.For 2015 the
Fed now projects 1.9% growth in GDP followed by 2.55% in 2016 and 2.3% in
2017.We have stated many times that the
recovery since the bursting of the “Housing Bubble” is the most tepid recovery
since the great depression and as you can see, the Fed is forecasting more of
the same.We have also stated that the
primary reason for this is that debt, i.e., government, corporate, household
and student loans, are eating us alive.At the same time, the Fed is predicting relatively “full employment”
with an unemployment rate of 5% starting in 2016.It turns out that the only way to get to a 5%
unemployment rate is to eliminate those people that were not able to find work
and have given up from the equation.Our
analogy here is to say the Fed is like the golfer that gives himself every putt
over 20 feet and then tells everyone he’s “scratch”.It is not reality!

From time to time, however, there are bright spots that
seemingly appear.One such spot is
automobile and truck sales that were very strong in June.It turns out that those sales were achieved
through a record percentage of leases and/or record length car loans.Said another way, debt is the reason that
auto sales were good.We therefore do
not believe this is a “turn for the better”.

If we are wrong, the Fed will have to raise interest
rates sooner and faster than the market expects.If we are right, the economy will
continue to grow at somewhere between anemic or even negative rates.Either way, stocks by almost any valuation
measure are expensive and when that is the case the forward rate of return
suffers; it always has throughout history and we expect it will now.This is why we remain so bearish on U.S. [More]

It's time Stephen Sondheim wrote another carnival song, and, more specifically, a sequel to the hauntingly memorable "Send in the Clowns" from his 1973 musical, A Little Night Music, which has proved so eerily prophetic in describing this year's political scene. As a glance at the crowded roster of Republican wannabe candidates for the presidency in next year's election makes clear, the powers that be in the GOP obviously have taken quite literally Sondheim's injunction that served as the title of the song, while the Democrats already have their very own barker and no shortage of mountebanks ensconced in their big tent. [More]

The list of negative factors affecting the stock market has now become so numerous that it is highly likely that a severe bear market has already started. We begin with the fact that, as measured by earnings and dividends, this is by far the most overvalued market of the past century. [More]

The entire
investment community was waiting on the edge of their seats for Chairwoman

Janet Yellen to make an announcement on March 18th at 2:00 PM in a
news conference.They were all waiting
to see if the word “patience” was removed from the Federal Reserve’s
statement.And not to disappoint the
investors Yellen did announce that the word “patience” was removed from the
statement (meaning that the Fed would not be eager to raise rates, but would be
patient).However, that announcement was
followed by long explanations about the fact that if the Fed did move to raise
rates the rate increases would be very slow.

Since the
worldwide investment community was anticipating the removal of the word, the
stock market was down over 100 points on the DJIA at 2 PM as the announcement
was made.Virtually every investor
(large and small) were “chomping at the bit” to sell equities if they detected the
removal of “patience”, since that meant to them the “removal of the punchbowl”
the Fed was supplying to the investment community over the past 6 years.Those were the years the Fed pumped trillions
of dollars into the U.S. [More]

Financial Sanity3/11/13Dear Sirs,
Just had to say to you thank you, thank you for your wonderful financial sanity.

Comment on Cycle of Deflation2/15/13Hello from Ireland again (i've mailed a few years over the past). I still enjoy checking your excellent site every friday morning. One comment on the cycle of deflation - you have plant closing & debt defaults happening after competitive devaluation however this, to a large degree and in Ireland anyways, seems to have come first. Maybe you could explain this?
Also, I have to say that even though I think you are right and will be proven so soon enough, you tend to underestimate [having read your column for ten years now I think you underestimate by a 2-4 years] the reflationary power of Central Banks and for how long they can keep them up for. [More]

Cycle of Deflation theory1/18/13I'm sure that other regular readers of your commentary have noticed the term "beggar-thy-neighbor" showing up more and more in the press and online. It seems to validate the "cycle of deflation" theory you have posed for so long. We've been warned. Thanks.

Wonderful analysis that I have been reading for many years9/03/11I would like your permission to send a copy of your 8/25/11 market commentary to them since I agree that we are in a major credit/debt contraction of hugh scale and a good deal of the asset write-downs are ahead not behind us. irrespective of your answer I want to thank you for wonderful analysis that I have been reading for many years.

Your Message is Loud & Clear8/25/11Your weekly commentary plus the weekly postings on John Hussman's site should serve as required reading for anybody trying to follow this market.
Your message (much more concise than Dr Hussman's, I have to say)is loud & clear.